Giving in the News: Body: The End Of Conspicuous Philanthropy?

May 18, 2009 — Jonathan

The End Of Conspicuous Philanthropy?Forbes
By Judith H. Dobrzynski, May 5, 2009

Anyone who scowled in 2008 when the New York Public Library announced that it would rename its historic Beaux Arts building on Fifth Avenue the Stephen A. Schwarzman building and chisel his name into it five times to mark his $100 million pledge, might have smiled at the news last week: The Chronicle of Philanthropy reported that anonymous giving is soaring. In this re-calibrated world, it seems, some big givers no longer want such notoriety.

Analyzing gifts greater than $1 million announced between June 2008 and April 2009, the Chronicle noted that 80 were made anonymously, or nearly 19% of the 422 total for the period. By comparison, during the past decade only about 3% to 5% of such gifts were made anonymously, according to data compiled by the Center on Philanthropy at Indiana University, the Chronicle said.

The proportion is somewhat inflated by one mysterious donor who this year has bestowed nearly $75 million on at least 14 colleges headed by women on the condition that no one know or try to find out. Subtracting that, the Chronicle says, would lower the proportion to about 16%–still three to five times normal.

And thank goodness, you may say. “Naming gifts” have proliferated like swine flu. In 2003, the writer Christopher Mason published a hilarious piece in The New York Times outlining the craziness at Disney Hall in Los Angeles–“Every atrium, every staircase, every reception room, even every escalator in and around Disney Hall carries the name of a benefactor”–and citing the mouthful “Ron Burkle-Ralphs/Food 4 Less Foundation Auditorium” as one example. At some institutions, even the restrooms are named, I’ve been told.

But as much as relief from over-the-top credit-taking is welcome, anonymous giving has a downside.

Giving is highly correlated with how the economy is doing, and as wealth exploded over the past 10 years, so did philanthropy. It reached its highest total to date in 2007, when Americans donated some $306 billion to charity. The stats for 2008 are not in yet, but Changing Our World, a philanthropic consultancy, says that figure generally ranges between 1.7% and 2.2% of the economy as a whole, which forebodes a decline.

The best givers are those who’ve already given, and perusing lists of gifts is a big way that fund-raisers find prospects. If anonymous gifts grow, development officers will have a tougher time finding new supporters: Where will they go for clues if donors go underground to avoid new solicitations?

Meanwhile, the mega-philanthropy of the last decade has thrived in part because of “conspicuous philanthropy.” This competition was kicked off in the mid-1990s, when Ted Turner bemoaned the proliferation of rich lists, arguing that they deterred giving by people who didn’t want to drop in the rankings.

Turner advocated the trumpeting of philanthropic gifts–and many publications obliged. Donors swiftly rose to the occasion–especially from laggard communities like the technology industry–and mega-gifts grew in number and size. In 2006, Peter B. Lewis, the chairman of the Progressive Corp., an automobile insurance company in Cleveland, famously gave $101 million to Princeton University specifically to top the previous largest gift, $100 million. Lewis had already given Princeton $119 million in smaller gifts.

But this is a new era. Conspicuous consumption is out: Some shoppers, according to press reports, are even leaving luxury shops like Hermés and Louis Vuitton with their purchases in plain brown bags instead of signature sacks. Many people who are doing well don’t want to rub other people’s noses in it, even with philanthropic gifts.

So the age of competitive mega-philanthropy may have ended with a whimper. Along with it, the inspirational role it played in encouraging smaller donors may also be lost (and donors in other countries as well).

Only twice in the past 40 years, according to Changing Our World, has there been more than a one-year absolute decline in U.S. giving–during the oil crisis of the mid-1970s and following the terrorist attacks of Sept. 11, 2001.

In economic terms, last year–and maybe more to come–are likely to be at least as bad as the ’70s, when total giving dropped a steep 5.4%. Making matters worse, there are more nonprofits chasing the fewer dollars now.

So while those five engravings of the Schwarzman name on the NYPL continue to seem particularly egregious, the end of that philanthropic era is not necessarily something to cheer. It’s something to be wary about.

Judith H. Dobrzynski writes about business and the arts for many publications, including The New York Times and The Wall Street Journal, and blogs at www.artsjournal.com/realcleararts. (Joel Kotkin’s column will appear tomorrow.)